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Lincare, Inc., one of the nation's largest providers of durable medical equipment has paid $5.25 million to resolve allegations brought forth through a qui tam action filed by a Relator on behalf of the United States. 

Lincare, Inc., one of the nation's largest providers of durable medical equipment has paid $5.25 million to resolve allegations brought forth through a qui tam action filed by a Relator on behalf of the United States.  The Relator alleged that Lincare violated the False Claims Act and the Anti-Kickback Statute from 2011 to 2017 in its attempt to compete in the marketplace by illegally waiving or reducing co-insurance, co-payments, and deductibles for beneficiaries participating in a Medicare Advantage Plan, also known as Medicare Part C.

This is one of the first False Claims Act cases brought by a whistleblower against a medical equipment provider for mishandling federal funds under the Medicare Advantage program.  Although Medicare Advantage plans are federally funded, health care reimbursement under Medicaid Advantage plans are paid by private insurance companies, like Humana, not by the traditional federal agency who pays for Medicare Parts A and B.  However, in 2009, the False Claims Act was amended and its scope was expanded in order to constitute any claims to defraud federally-funded programs rather than just claims submitted directly to the government.  Therefore, in this case, even though technically the claims were paid by private insurance companies with funds received from the government, they are constituted as a violation of the False Claims Act.  

In the Complaint, Relator alleged that Lincare violated the False Claims Act by reducing copayments, co-insurance, and deductibles for certain Medicare Advantage members in order to maintain its market share in the face of competition. 

In 2011, Apria Healthcare, one of Lincare's largest competitors in the oxygen equipment and service business, became Humana's exclusive "in network" durable medical equipment provider.  Humana is a health care insurance company that administers various federally-funded Medicare Advantage health insurance plans.  The contract allowed Apria to provide various durable medical equipment at rates that were 60 percent of the cost of the same services by Lincare.  Relator alleged that, to compete with Apria, Lincare partially waved the co-pays it charged to home oxygen customers covered by Humana-administered Medicare Advantage plans.  However, Relator alleged that Lincare continued to be reimbursed higher than Apria – so for every $100 worth of equipment, the government subsidized $70 rather than $48 under the rate negotiated with Apria.  Relator claimed that reducing co-pays to maintain market share and avoid losing customers to Apria counts as a violation of the False Claims Act.  Therefore, he alleged that every payment submitted to the government for reimbursement after the point at which they reduced their co-pay is classified as a false claim. 

In addition to alleged FCA violations, Relator also alleged that Lincare violated the anti-kickback statute.  This statute was created to make sure there were no financial conflicts of interest in the federal healthcare system.  The statute itself aims to prevent the misuse of public funds by barring Medicare claims that are the result of solicitations, payments, and other compensation from vendors to beneficiaries of federal health care programs.   By law, it is required that all contracts between CMS and a Medicare Advantage HMO or PPO include a clear agreement to comply with all federal laws and regulations, including but not limited to, both the False Claims Act and the anti-kickback statute.  Further, Relator alleged that a medical equipment supplier who routinely waives or reduces co-pays of Medicaid beneficiaries without a showing of financial hardship in order to influence the purchasing decisions of the beneficiary is violating the anti-kickback statute.    

Relator discovered information that led to his allegations while he was employed as a billing supervisor at the Lincare billing office in Lawrence, Kansas.  He worked at Lincare from 2006 through 2015 and became very aware of their business practices relating to billing the government regarding Medicare Part C and Medicaid.  Relator estimated that more than half of Lincare's bills to Medicare Part C HMOs and PPOs for monthly oxygen were fraudulent. 

After Relator filed the lawsuit, the United States Department of Justice investigated and intervened on August 8, 2018. U.S. Attorney Steven D. Weinhoeft of the Southern District of Illinois announced the settlement on Thursday, August 16, 2018.  The Relator will receive $918,750 from the settlement.

If you are aware of fraud against the government, whether or not it relates to the healthcare system, you may be eligible to blow the whistle in a False Claims Act lawsuit.  For more information, contact Goldberg Kohn for a confidential consultation.